Latest / Brand Insiders / Eivind Hjulstad of Citybox Hotels on Scandinavian Design, Budget Done Right, and Why the Middle Market Is Running Out of Time

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Eivind Hjulstad of Citybox Hotels on Scandinavian Design, Budget Done Right, and Why the Middle Market Is Running Out of Time · Brand Insiders

• 0:13
  SPEAKER_02: Welcome to an exciting episode of Brand Insiders.
• 0:17
  SPEAKER_02: I'm joined today by Ivan Julstadt.
• 0:20
  SPEAKER_02: Did I pronounce that properly?
• 0:22
  SPEAKER_02: Yeah, that's correct.
• 0:24
  SPEAKER_00: Hello from Norway.
• 0:25
  SPEAKER_00: Yeah.
• 0:26
  SPEAKER_02: Yeah, so Ivan Jullstadt, he's the CEO and co-owner of City Box Hotels.
• 0:34
  SPEAKER_02: And he's coming in from Oslo, Norway today.
• 0:38
  SPEAKER_02: Ivan, how are you?
• 0:41
  SPEAKER_00: I'm totally fine.
• 0:42
  SPEAKER_00: I'm I'm I'm placed in Bergen, West Coast in Bergen, not Oslo, but on the other coast, yeah.
• 0:49
  SPEAKER_00: But we have hotels in in Oslo as well, and I'm there often.
• 0:53
  SPEAKER_00: But but my my office and hometown is in Bergen.
• 0:58
  SPEAKER_02: Okay.
• 0:59
  SPEAKER_02: So to start off with, tell us about City Box hotels and where all the locations are.
• 1:05
  SPEAKER_00: Yeah, Citybox is a modern uh budget hotel chain.
• 1:10
  SPEAKER_00: Um we started up in Bergen in in Norway.
• 1:15
  SPEAKER_00: Um we now have 10 hotels operating in six different countries.
• 1:21
  SPEAKER_00: Um it's been uh uh Citybox was started up in 2006.
• 1:28
  SPEAKER_00: I joined the company in 2010.
• 1:31
  SPEAKER_00: And uh it's uh a couple of uh last years that we have been expanding uh internationally, and um the idea of of Citybox is is that um we have taken away those things that we think is not necessary in hotels um and a focus on what the guests value most uh in order to uh have low prices for uh our customers.
• 1:58
  SPEAKER_00: So that's the main idea of uh of Citybox.
• 2:02
  SPEAKER_02: Yeah, and before we before we start a recording, you'd mentioned that the affordable or the budget hotel traditionally has a bad reputation, uh or a reputation, let's say.
• 2:16
  SPEAKER_02: But CityBox really really uh reverses that and really gives it a modern, uh fresh, uh, real uh really solid branding and design without banking the bank in terms of it still being a very affordable uh night stay.
• 2:34
  SPEAKER_02: Could you explain that?
• 2:36
  SPEAKER_00: Yeah, that was uh the idea of the concept when we we started up.
• 2:40
  SPEAKER_00: Um we saw that um a lot of uh budget hotels with with the no prices were either outside of the city or there was the crap hotels.
• 2:50
  SPEAKER_00: Um we saw that there was uh uh a market for that.
• 2:54
  SPEAKER_00: Um and we we wanted to explore it.
• 2:57
  SPEAKER_00: Uh we had the ID.
• 2:58
  SPEAKER_00: Uh we were among the first hotels that uh took away the reception.
• 3:04
  SPEAKER_00: Uh so we we started up with checking terminals uh back in the days, it's 16 years ago, uh kind of a homemade uh checking terminal uh from a local producer.
• 3:17
  SPEAKER_00: Uh because with the reception, our guests went to the reception to approach them to get help, uh, but we took away the reception itself and uh in order to get our um customers to go to the check-in terminal.
• 3:32
  SPEAKER_00: It was kind of similar to what happened in the airplane um on the airports, where uh they also started with the check-in terminals.
• 3:42
  SPEAKER_00: There were people there helping them to how can we use these check-in terminals.
• 3:46
  SPEAKER_00: We did the same in the in the beginning, but that was the the whole idea.
• 3:50
  SPEAKER_00: Um But we also, together with with the concept that we we uh started off with, we found out that we needed to uh have a focus on the design and the the interior of the hotel.
• 4:03
  SPEAKER_00: So the the first person I hired in Citybox was an interior architect um to help us to um uh find out how should this uh hotel look like, how should the hotel rooms look like?
• 4:18
  SPEAKER_00: What's uh within the efficiency of a hotel room?
• 4:22
  SPEAKER_00: How big should the hotel room be?
• 4:25
  SPEAKER_00: Uh, how can we put those things in the most efficient way?
• 4:28
  SPEAKER_00: So we created those um um types of rooms uh at the same time, but we also made the brand, the branding of Citables uh together with with the interior architect at that time.
• 4:42
  SPEAKER_02: Yeah, you know, there's uh there's something really profound internationally to be said about Scandinavian design.
• 4:48
  SPEAKER_02: Uh everyone knows about IKEA and uh then others in the interior design, they know about uh Scandy and um you know the sort of stripping away everything and really letting the elements speak to um to the nature of the room.
• 5:04
  SPEAKER_02: Uh so I'm wondering, could you unpack that a little bit more in terms of how city box hotels reflect Scandinavian design and uh do so efficiently on a per square meter basis?
• 5:17
  SPEAKER_00: Yeah.
• 5:18
  SPEAKER_00: Uh Scandinavian design, and it and I uh when I say Scandinavian design, I know my interim architect don't like that name because it can be quite a lot.
• 5:27
  SPEAKER_00: Uh, but uh the idea is to get um uh all the things that we have in the hotel room should be in use of something.
• 5:37
  SPEAKER_00: Uh and and together with the Scandinavian design, that's how we created it.
• 5:42
  SPEAKER_00: Um we the efficiency of a hotel room um was also on on the table, but it it should not be two small hotel rooms.
• 5:52
  SPEAKER_00: So we created a pathway saying that you should pass on both sides of the bed and then in front of the bed.
• 6:00
  SPEAKER_00: But besides that, we should get it as efficient as possible.
• 6:03
  SPEAKER_00: So our double rooms are uh the the um the perfect double room in in uh towards the efficiency is around 14 square meters.
• 6:14
  SPEAKER_00: Obviously, we have competitors that are down to 10 or even 8 square meters, but um uh we're talking about efficiency, it's the whole hotel building because we have taken away all those things that we think are not necessary in the hotel, like gym, bar, restaurants, and so on and so on.
• 6:32
  SPEAKER_00: Because for us to be competitive towards um the lease of a hotel building, we needed to look at the efficiency of the building itself.
• 6:42
  SPEAKER_00: So we also uh took away the restaurant, for example, um and and uh the the windows on the streets uh could be rented out to others operating in the F and B market.
• 6:57
  SPEAKER_00: And they could uh uh pay higher rent uh on the market level to the landlord, and in in that case, we can kind of uh uh pay the same rent as every other hotels.
• 7:13
  SPEAKER_02: Um just uh unpack that a little bit more for people who are unfamiliar of a hotel leasing structure, could you talk a little bit about that in terms of how you're structuring the deals for your hotels?
• 7:29
  SPEAKER_00: Yeah, that's in Scandinavia, I think it's a little bit different than the rest of the world.
• 7:35
  SPEAKER_00: Uh because we have um a revenue-based uh rent on top of a minimum uh rent.
• 7:43
  SPEAKER_00: Um and and I think to to do the the revenue-based rent together with a landlord is a very positive thing.
• 7:52
  SPEAKER_00: Because if we um get things around and we we have a high occupancy and we deliver a high revenue, then it comes back to the landlord as well, because then it will add on the on the the rent level of uh towards the landlord.
• 8:08
  SPEAKER_00: Uh and a typical lease in in Norway is uh 15 to 20 years with uh potential option of uh um further years as well after that.
• 8:19
  SPEAKER_00: So it's so we're kind of uh doing these things together with with the landlord, um, and also the way we are creating the hotels because with we have uh interior architects inside of the company.
• 8:33
  SPEAKER_00: So when we get a lease uh with uh a landlord, we are from the beginning talking with the landlord and the project managers in order to how can we create this hotel the best possible for a city box use.
• 8:49
  SPEAKER_02: And the hotels, the the hotels themselves, they're not out in the suburbs, uh, you know, the or exurban and building ground up.
• 8:59
  SPEAKER_02: A lot of times you are retrofitting existing buildings.
• 9:02
  SPEAKER_02: Is that correct?
• 9:03
  SPEAKER_00: Yeah, we're doing uh all of them, I think.
• 9:07
  SPEAKER_00: We have new buildings uh in uh Helsinki, uh for example, um in Tallinn.
• 9:15
  SPEAKER_00: Um, but we have also conversion uh from office to hotel, and we also have conversion from um older hotels uh bridge to renovation to a city box hotel.
• 9:28
  SPEAKER_00: So we we are we're actually looking at at all these kind of um uh different types of uh billings.
• 9:36
  SPEAKER_02: Yeah, and then uh but overall what's guiding that process is uh hyperlocation, let's say, being very close to the hearts of the cities uh for all of your locations.
• 9:48
  SPEAKER_02: Is that correct?
• 9:50
  SPEAKER_00: That's that's what we are hoping to do.
• 9:52
  SPEAKER_00: Yeah.
• 9:52
  SPEAKER_00: Uh that's where we start up.
• 9:54
  SPEAKER_00: Obviously, uh, if we are going into bigger cities, uh it's more competitive to get uh as central uh as we want.
• 10:04
  SPEAKER_00: Uh so some of our hotels are in uh hubs, connection points, uh but uh very reachable to Citizen.
• 10:13
  SPEAKER_02: Cool.
• 10:14
  SPEAKER_02: Uh so recently City Box has expanded outside of the Nordic market in places like Antwerp um and others that are outside of the traditional Scandinavian market.
• 10:27
  SPEAKER_02: But I want to drill down first to talk about the Nordic market and what makes it distinct.
• 10:32
  SPEAKER_02: So could you explain that a little bit more?
• 10:36
  SPEAKER_02: We've unpacked leasing agreements, we've unpacked uh Scandinavian design, but talk to us about the Scandinavian Scandinavian traveler overall.
• 10:47
  SPEAKER_02: Yeah.
• 10:48
  SPEAKER_00: Scandinavian cities or or uh Scandinavian itself, we we are uh both uh Norway, Sweden, Finland.
• 10:56
  SPEAKER_00: Um there's a lot of high mountains, a lot of fjords.
• 10:59
  SPEAKER_00: Um even even though the distance between cities are not that long, we don't have fast trains, it's not that easy accessible, so so we we need to uh travel by plane.
• 11:12
  SPEAKER_00: And when you travel by plane, uh the inbound, the domestic market, um it's it's um uh they are using hotel for for overnight.
• 11:23
  SPEAKER_00: Um so so that's I think it's a big difference from from maybe other countries that we have a big high domestic market, and then obviously the Scandinavian market has been um popular for for many many years, uh even decades, but the last couple of years.
• 11:42
  SPEAKER_00: With everything that happens uh with uh warm climate, um the kulkation uh is is a hot uh topic.
• 11:53
  SPEAKER_00: Um Scandinavian is it's a very hot market for uh Southern Europe uh travelers.
• 12:01
  SPEAKER_00: Uh they don't want to sit there with the heat of 40 degrees, they want to travel to Scandinavian to see it.
• 12:07
  SPEAKER_00: Uh northern part of Scandinavia is very popular towards the northern light.
• 12:12
  SPEAKER_00: Uh, and we've seen uh um uh from every uh the Americans, the Asians, uh they are traveling to Scandinavia.
• 12:22
  SPEAKER_00: So so it's uh it's a very popular um tourism destination.
• 12:27
  SPEAKER_02: So well, you talk about tourism and you talk about the domestic market, which is could be leisure, but also uh corporate as well coming in.
• 12:36
  SPEAKER_02: Yeah.
• 12:36
  SPEAKER_02: And uh cool cations, uh that I guess applies more so for the summer months when Southern Europe is almost becoming unbearable in a lot of main cities.
• 12:48
  SPEAKER_02: Uh but aside from Northern Lights, people uh people going more so I guess over to Tromso to the north.
• 12:56
  SPEAKER_02: Uh who who's coming to your hotels in January, February when uh it isn't as hot and uh light levels are a little bit low?
• 13:08
  SPEAKER_00: Yeah, January February is probably the two lowest months uh uh when it comes to to occupancy, at least for the Scandinavian market.
• 13:18
  SPEAKER_00: Um we have hotels in Oslo and Copenhagen, they are all rounders.
• 13:24
  SPEAKER_00: Yeah, high occupancy uh throughout the whole year.
• 13:26
  SPEAKER_00: But uh in cities like uh Bergen, um Helsinki, Tallinn, um Kristiansand uh in Norway.
• 13:36
  SPEAKER_00: Uh it's typically uh low-low season months, um mainly driven by uh domestic travelers.
• 13:44
  unknown: Okay.
• 13:44
  SPEAKER_02: And uh you know one thing to drill down to Norway, Norway does have the highest labor costs, uh or maybe the highest near the top, let's say.
• 13:55
  SPEAKER_02: Uh and you've talked about efficiency with regards to the check-in.
• 14:00
  SPEAKER_02: What other ways have you innovated Cinebox to really drive that efficiency without uh without adding friction to the overall guest experience?
• 14:11
  SPEAKER_00: No, it's it's about having focus on the guest experience.
• 14:14
  SPEAKER_00: Uh so so we with with technology, um we have uh or I can start from from from back end when one of the things that I hate hate the most is the standing queue when checking in.
• 14:28
  SPEAKER_00: So so so that's um um and that comes to to the guest experience because if you travel to to a hotel, you'd want to check in and you want to check in fast because you want to get to your hotel room, uh either because you had a long trip or you have things to do in the city.
• 14:44
  SPEAKER_00: Uh so that's uh one of the things that are came to us very natural, uh with the checking terminal and and to use technology to do this as seamless as possible, um, and and not having uh the interaction with uh uh either a queue or needed to stand with uh receptionists filling out forms uh and using time for that.
• 15:08
  SPEAKER_00: Um but also when it comes to the to the food and beverage part, uh teaming up with uh um with with the other concepts uh that are uh connected to the hotel instead of operating it ourselves, uh because uh they are much better than uh us to do the food and beverage, uh giving us the possibility to lower our um uh personal costs.
• 15:35
  SPEAKER_00: And I think that's one of our highest successful factors because in in our most successful hotels we have uh uh employee costs around 15%.
• 15:49
  SPEAKER_00: And in Norway, we are looking at the doubled in in a full-service hotel.
• 15:55
  SPEAKER_00: So so I think that gives a picture of how we can uh operate uh efficiently, but also how we can compete on on the price level towards um the customer and how we can have lower prices than our competitors.
• 16:10
  SPEAKER_02: So earlier in the conversation, you mentioned that you really wanted to focus on what's valuable to the guest experience.
• 16:19
  SPEAKER_02: And therein you have to make decisions on what to take away and what to preserve to design what the City Box Hotel feels like.
• 16:30
  SPEAKER_02: So tell us about that process of how you decided that saying that the check-in kiosk is something specifically that can add efficiency while not taking away from the guest experience.
• 16:45
  SPEAKER_02: How did you make those decisions in any way?
• 16:49
  SPEAKER_00: Uh back back then it it was because we saw it happened in in the airports.
• 16:54
  SPEAKER_00: So so and and and other places as well that when when the people are getting used to it, they see that this is even more efficient than standing in a queue.
• 17:03
  SPEAKER_00: So so that was like an an easy kind of uh uh way to go.
• 17:07
  SPEAKER_00: Um and when you're starting a hotel from scratch, you can choose to do it, I think.
• 17:13
  SPEAKER_00: Um for the other parts, I think it's like uh total of um what we like like to call is value for money.
• 17:25
  SPEAKER_00: So whatever you pay for, you have an expectation of uh what you get.
• 17:31
  SPEAKER_00: And I think the the the total of what you get at Citybox should be uh equal to what you pay for the hotel room.
• 17:40
  SPEAKER_00: So I think that's something that we started up from the beginning, uh, and we saw that we this was a place for us because it happened or we started up at the same time as the OTAs started up.
• 17:55
  SPEAKER_00: Meaning that everything started to uh be transparent, that the guests could give us a feedback uh the minute they came out of the door.
• 18:04
  SPEAKER_00: And we uh came along the best on value for money, and we have feedbacks to our hotels that are uh uh on average or even higher than the market itself.
• 18:18
  SPEAKER_00: So I think that's the kind of uh answer the question uh to what we have done, uh, and that's uh kind of uh proven that our concept is working towards the market.
• 18:30
  SPEAKER_02: Yeah.
• 18:31
  SPEAKER_02: Uh well, we talked about the check-in kiosks, which is physical technology.
• 18:36
  SPEAKER_02: The other element to all this is the information technology.
• 18:41
  SPEAKER_02: You know, you talked about um the OTAs where where you're now able to benchmark comp sets and put data behind that.
• 18:48
  SPEAKER_02: Uh, there's the customer satisfaction surveys and how we're able to tie that to specific reservations.
• 18:55
  SPEAKER_02: So tell us about your overall IT architecture.
• 18:59
  SPEAKER_02: Uh, you don't need to go into any specifics here, but tell us about the IT and how that's become intellectual property for City Box Hotels to really drive the value uh for the guest experience as well as ownership.
• 19:15
  SPEAKER_00: Yeah, I think that that's a lot of things that happened just uh last year, last half year.
• 19:22
  SPEAKER_00: Um uh data is is so much easier now to uh to get and and to uh analyze uh and and to put it into action as well of what can be done and not can be done.
• 19:36
  SPEAKER_00: Um I think what AI cannot do is to um do something about the experience of the hotel guest, what the guest is seeing and and what they are experiencing.
• 19:48
  SPEAKER_00: And um I think it's important that every hotel operator needs to focus on AI technology, how can we um uh use that technology to to um get a better experience for the hotel guest, but um we we we can't forget that um uh AI can't take away what the guest has experienced when they can come into the hotel.
• 20:15
  SPEAKER_00: Uh and they need to feel comfortable and they need to at least what we are focused uh quite a lot on is the value for money.
• 20:23
  SPEAKER_00: But we are working a lot with uh AI, how to communicate with the guests, um how to answer out the guests uh before, uh uh while they're traveling, while they're coming to the hotel, when they're staying at the hotel, and afterwards when they have checked out.
• 20:41
  SPEAKER_00: And when we can use AI to do that uh much more efficiently than we uh could have done just a year ago, it gives us a better insight on uh on the our guests and and how we can um uh approach uh new markets and and so on and so on.
• 20:59
  SPEAKER_00: But uh it's a really big field, uh uh probably uh a different uh podcast, but uh there's a lot of things happening uh in the uh AI, especially uh and technology part.
• 21:14
  SPEAKER_02: Yeah, well what what I'm saying uh here, and what I'm sensing from what you said, is that AI really can accelerate the overall strategy for the brand and allow you to assess performance on individual hotels, make faster adjustments, as well as translate that into uh further development of existing hotels and new uh new potential uh locations that you'd look to open up.
• 21:42
  SPEAKER_00: Yeah.
• 21:43
  unknown: Yeah.
• 21:43
  SPEAKER_00: And the last thing you said, uh new location.
• 21:46
  SPEAKER_00: Yeah.
• 21:47
  SPEAKER_00: Now we have data so much easier uh accessible.
• 21:51
  SPEAKER_00: Uh we have our concept.
• 21:54
  SPEAKER_00: Uh and and um uh previously we we we had a concept, we had a market, we can analyze.
• 22:00
  SPEAKER_00: market but we don't we don't know if if the concept fits the market now it's much easier to actually know that should we go to that city uh or should we go to that city so so and and um we are um very successful when it comes to the leisure market uh we are uh good on the on the corporate market but if we go into uh a city where it's 100% corporate then we should maybe uh think twice before we open up that hotel uh because it should be a combination of of of uh both the corporate and and uh and and leisure market well uh corporate leisure are you using ai or any other technologies to look at the mice market mice and groups as the third pillar yeah that's that's so uh groups is is one of those things that are still um lacking a little bit when it comes to technology I think um um it's it's both ways those both for the the the um uh operator side I think but but also for the group uh oriented side um they still like to have the phone calls they still like to to uh add on bookings on the on the on the group side uh and um and I think especially on the uh elderly part of of those kind of groups traveling uh because it's most of them that are traveling especially to to Scandinavia but um I think also they need to adapt to the technology because uh hotel operators are now building hubs with the technology with AI um we change our PMS uh this year and they are not um that manually uh that it used to be so so I think also they need to uh adapt um the the hotel market as well you you changed PMSs was that a difficult process um uh uh I'm not sure i i if i ask uh some of those that uh had the most to do with it uh I think the answer was yes um uh that's like uh ripping out the heart of the company and uh putting in a new one uh uh with uh we had 10 hotels uh I know hotel operator that has 200 hotels um yeah that that was uh uh quite a job um and a lot of uh testing and and failing even though we thought it should be more more or less flood and play but um there's a lot of things to to think about we had our PMS for 16 years um with all the data with all the traffic with all um the analysis as well so it's um and and a new way of working uh obviously for our employees out there in the hotel uh totally different PMS than than we used to and then obviously all the the integrations that um needed to be hatched on um to the new PMS well yeah one of the most important integrations with the PMS is to the CRS uh central reservations uh and of course you talk a lot about uh value for money and really driving direct as a key value driver for city box hotels versus a lot of other hotels that rely on the OTAs so tell us a little bit about your competitive strategy for distribution and how Citybox really offers guests a lot of yeah um I think uh we we don't get that much direct traffic uh as you uh stated um I think we um from the beginning when the OTAs came and we found out that the OTAs was uh quite a good fit to us uh because um without using too much money on marketing uh we're not having anyone hired in the sales department uh we we used the um the OTAs to to be out there in the market and I think one of um the great things about Citybox uh with the feedbacks from our guests is that we are all the time on high on the list when people are searching for hotels around in the city.
• 26:45
  SPEAKER_02: Um so um I know uh I shouldn't talk too much positive about the OTAs and the commission you're paying to it but yeah you know and we are working every day to to change the traffic from the OTAs to our sites and and and we are quite good on that as well but um we we will not shut down the OTAs uh yet um it's still a big part of our uh revenue and um it's uh uh good platform for us to to be this for uh when it comes to um especially value for money yeah uh you know I um I look at it and say well the first time a guest book with you it could be through the OTA but then subsequent times you want them to book direct with you so you can get that uh that loyalty uh to the brand um do you have any specific strategies around that process of uh converting people for repeat stays no it it's exactly what you're saying and and we have um uh Citibox France it's it's our kind of loyalty program um um to to uh market ourselves towards the whole world because Scandinavius has the whole world as a market uh it's it's impossible so so we use the OTAs to uh to be there to be visible but when the guests are coming to our hotel we we communicate with them um in different ways in different platforms in order to to get them to uh join our loyalty program uh Citybox France where we offer a discounted rate for the next day for example and um it's also easier now to to get uh more direct bookings at least for us with the rate parity case that came up with booking.com and so on because now we can differentiate ourselves with lower prices with uh um discounts on our web page um or add-ons um than we we could before yeah and that's that's very important the pricing transparency and the tools around that yeah so you know you mentioned reviews and how you're always scoring near the top and the work you've done to constantly get near the top because that is a constant battle.
• 29:11
  SPEAKER_02: One thing I'm seeing is that reviews are becoming very important for AI search uh and how people are going to are currently using things like ChatGPT to actually source hotels, not just give them some trip planning ideation.
• 29:28
  SPEAKER_00: So what's your thoughts on AI search and how cities Citybox can adapt to this new channel I think it's it's that we we have a concept and a brand that is is kind of easy to understand and and to make it easy to get it to understand to the AI search engine as as well that we are not um packed in with different kinds of layers.
• 29:52
  SPEAKER_00: We are uh uh simple easy uh low price good location so so it's those things that are very often that you're searching towards so I that's I think that's a good thing that we already have uh and and that's why we are uh often coming up in those search as well when you're using ChatGTP or or others and um but also um being visible uh in in other uh platforms uh how things are written on a web page uh uh and so on and so on.
• 30:29
  SPEAKER_02: Yeah the uh I guess the structured answers and everything that the AI likes.
• 30:33
  SPEAKER_02: Yes.
• 30:34
  SPEAKER_02: Are you are you seeing any metrics to point to AI traffic favoring you because you have such a simple and easy to digest concept for AI, such as you know share of answer increasing or a lot of bot traffic that stays on the site for longer.
• 30:53
  SPEAKER_02: Are you seeing those sorts of metrics?
• 30:56
  SPEAKER_00: Yeah we we we see it uh but but with not with big numbers yet but we see it uh especially this uh last um couple of six months especially in front of this summer season high season we we we uh saw that uh um it has changed and and obviously this is something that's gonna be uh more and more popular um uh people are using uh AI uh more and more but it also are connected to um those platforms that are uh we see that TripAdvisor is becoming even more important than it used before because it's it's kind of catching it up to uh through uh AI because um um instead of if through through the OTAs.
• 31:44
  SPEAKER_02: So that that's something we also are working with and and towards yeah and um I guess the next phase for AI travel search is going to be the advertising side where you know on on paper ChatGPT is not a solvent company uh but they're everyone's saying that in order to make it solvent they have to go to an advertising model.
• 32:09
  SPEAKER_00: Would you consider Citybox uh to advertise on that channel yeah if it if it gains those traffic we are a small player uh in in those fatality um world um uh and um we we are um looking towards where we can gain the most revenue where we can compete the best um but um if that happens it will mean that the traffic will move from or the OTAs or the direct traffic to um to AI and search engines uh towards there and then the the um uh it's it's I think it's two things that hotels are uh up to is to hire their revenue and to to lower their costs and and with the OTAs it comes a high commission.
• 33:03
  SPEAKER_00: So so then it depends on what's the price of being part of something like that.
• 33:07
  SPEAKER_00: Um I think that will be uh quite relevant.
• 33:12
  SPEAKER_02: Yeah so you all this talk of AI search we're essentially looking ahead to the next few years and a lot of the forces that are changing travel but uh therein um City Box Hotels is expanding.
• 33:26
  SPEAKER_00: So tell us about uh your expansion plan yeah this this year uh we got bigger outside of Norway than we are in Norway uh with in six different countries uh we will um reach uh above 500 million million kroners which are 15 million dollars US dollars but in we signed three new projects just before the summer we have three others in pipeline before um so with the hotels in that we have in pipeline which will open next year and the coming two and three years we will double our revenue um from where we are today uh so so we are um uh quite on an expanding uh travel right now um and and our company is also focused on uh because it will be uh uh development uh follow-up on on on projects and so on but also the project and the hotels that we have is is big hotels so we're gonna open up a hotel in Troms with 351 hotel rooms yeah which will be the biggest hotel north of Trondheim which is uh a middle uh uh city in in in Norway and we signed a hotel in Copenhagen for 325 hotels uh uh central in in in Copenhagen so so uh we we have six new hotels coming but they're also big hotels so so that's why we are kind of doubling our our uh revenue for the next coming years well let's uh let's drill into the one in uh Tromza the uh did I pronounce that right Tromsa?
• 35:16
  SPEAKER_00: Yeah yeah that's okay yeah so I mean that is the the destination I guess for northern lights uh but that's only one demand driver so when you're looking at 350 rooms in a northern city like that what are what else is uh is bringing people to that city aside from just the leisure component uh yeah that's Northern Light it's a very small city uh very far north in in in Norway and um it's been uh more and more popular for every year I think um and uh I think it's it's uh the Northern Let is so big that that you can compare it to the Daifell Tower in Paris or uh different kinds of attractions that everyone needs to go and travel but also combined with with the Culcation part because it's the climate there is is um uh you you are lucky if you get a couple of uh days with over 20 degrees but uh um that's what um the market is searching for now so it's um um as long as the northern light is uh still gonna be there uh no one's gonna take it away for from from Sedai.
• 36:31
  SPEAKER_00: I think it's gonna be an attractive city to travel for uh decades going on.
• 36:37
  SPEAKER_00: It's um it seems like it's not a stopping market.
• 36:42
  SPEAKER_02: Yeah I mean well the only thing that would make the northern lights go away is the stripping away of the ionosphere uh on the planet and then we have much larger problems so that's yeah um so I mean on the note of uh cool cations or cold cations is this directly tries into climate change uh and uh therein are you are you seeing people not only doing this uh passively or just showing up because they want the cool cation but are you seeing people directly mention that they're coming to northern cities because they want to escape the the heat during summer?
• 37:27
  SPEAKER_00: Yeah definitely and uh and and I'm I'm based in in Bergen and that's uh we have 250 days a year uh a year with rain so so it's it's like a rainy city and and the tourists that I talk to uh the newspaper approaching them as well is it they love it because for them this is exotic to to come here in the summer and and to to um uh experience 12 degrees and rain and wind from coming from the side that from them that's uh exotic um on the other side we had a uh quite hot summer in in Oslo and and the um travelers are are expecting kulcation but we in Oslo we get 30 something degrees as well so they kind of get fed up that hey we went to Oslo for culcation but it it's it's still uh as hot as it is in in in Spain.
• 38:20
  SPEAKER_00: So that can happen as well with with the climate um we have uh um guests in in Bergen that are asking for money back from us to the hotel because they can see the northern light but the northern is not in Bergen you need to go to Troms so so it it's sometimes it's about expectation sometimes it's about um uh that the climate can be um uh 30 degrees in Norway as well it can happen uh we have northern light in Bergen uh a couple of days in the air but um um uh probably they saw an AI picture of uh uh the famous mountain in Bergen with northern light or I don't know but um yeah yeah I I guess you need a structured answer for the AIs there.
• 39:05
  SPEAKER_02: You know a question can we see the northern lights in Bergen and the answer is only two to three days per year but most likely not.
• 39:11
  SPEAKER_02: So that way it trains the AIs that everyone's doing it so the AI doesn't hallucinate and give the wrong answer there.
• 39:18
  SPEAKER_00: Yeah no it's true.
• 39:18
  SPEAKER_00: No but but I I think um and and uh it's the same as we are traveling to to Spain uh because we are fed up about the cold weather and the rain and we want to have sun and and a warm climate for uh two weeks in the summer holidays.
• 39:34
  SPEAKER_00: Um for for those living in in Southern Europe or in in in the warm places in Asia they have this year around so they want to um get away for that they want to to to experience uh uh a climate and a weather that are um uh much lower than they are used to so that's totally understandable and um I think that's um the Navy culcation I think that's something that's gonna be there for for a while yeah it's it's a mega trend and um uh you know fingers crossed we solve climate change uh by various means but uh it I think that that it uh it will remain because people will still want to experience the beauty of Scandinavia um yeah and and you do you see the you see the the opposite side is that the the for us in Scandinavia when we are traveling we we typically have vacation in July when we are traveling now I think we are also searching for other parts than we used to uh normally you travel to Spain or you travel to Italy but when you see on the news that they are 45 degrees and uh you don't want to spend your money or your time on on on those kind of things.
• 40:51
  SPEAKER_00: So we are also looking at different kinds of places now when we are uh choosing our on our location uh well I guess uh Bergen and other places are also significant ports of call for uh cruise cruising uh and to see the fjords so do you get a lot of what we call pre and post days where people are taking a cruise ship and they they want to see the city first so they spend an extra few nights yeah the we have a lot of cruises in Bergen uh with um they're coming in here for uh just a couple of hours or a day and and when you are if you walk around in the city on those specific days where there are both two and three cruise ships at the same time uh there are a lot of tourists in the city there are queues to the miles of queues to the biggest attraction just to go to the mountains or to to go to the fish market.
• 41:52
  SPEAKER_00: And um the the locals are um uh debating whether uh they should do something about it.
• 42:00
  SPEAKER_00: Uh they should um try to um separate it uh and uh uh stop it even um because um there's uh it's quite overwhelming for quite a small city as Bergen to have so many tourists coming in in the streets at the same time yeah so it's it's it's tough right there's a lot of pushback against that uh the the traffic studies and footfall uh for cruisers but yeah and and you have and yeah and yeah uh more a little bit more north you have the fjords where you have uh just smaller villages where the cruises are coming in with 6,000 uh guests in the in the cruise ship just going into a smaller village of 200 people so so it and and you have the pollution for for cruise ships debate as well uh so it's um there's a lot of debating around cruise ships uh these days yeah um so it's city box's 20th anniversary this year is that correct that's correct yeah so what does what does city box look like in 10 years time for the 30th anniversary uh hopefully we have a lot of new hotels uh in new markets um hopefully we we keep on daring to develop ourselves because i think that's been uh a big part of what we've been doing uh try new to stuff don't do like uh others dare to to say that um we are doing things differently uh so so to to um uh challenge ourselves to test new things um invest in new things um even though it's not the smartest thing you have done you have at at least done it that we have a culture for the employees to do it as well um because if If not, we're gonna be just mainstream and we're gonna uh be eaten up by uh some of the big players.
• 44:07
  SPEAKER_00: Um so I think that's um for the next 10 years, obviously technology uh to to focus on that um and um to be profitable because if you're not profitable as a company, you cannot grow.
• 44:25
  SPEAKER_00: And um I think that's uh very important as well on uh next uh 10 years' journey.
• 44:34
  SPEAKER_02: Well, yeah, it's it's everything, you know.
• 44:36
  SPEAKER_02: Uh that without profit, you can't pay your teams, and then you know you can't deliver great hospitality at all.
• 44:43
  SPEAKER_02: Um so outside of just City Box Hotels, what what trends in hospitality get you get you very jazzed, get you very excited?
• 44:55
  SPEAKER_00: Um I see that there are other players like us coming on on the market.
• 45:01
  SPEAKER_00: Um uh I see that the technology obviously is is uh um there.
• 45:07
  SPEAKER_00: Uh short-term uh partner uh operators are coming more and more.
• 45:13
  SPEAKER_00: Uh and I think that's gonna come more.
• 45:16
  SPEAKER_00: And I think those um middle hotels, those so-called four-star hotels, I think they're gonna struggle in the future.
• 45:27
  SPEAKER_00: Uh and on the other side, I think that the um high-scale hotels, um there is a huge market for them.
• 45:35
  SPEAKER_00: Um, there are uh a lot of uh guests that are willing to pay for the extra thing.
• 45:42
  SPEAKER_00: And especially in Scandinavia, I think there's uh um uh room for more of that type of hotels that you kind of see more internationally.
• 45:54
  SPEAKER_00: Um and I think they they're gonna come as well.
• 45:58
  SPEAKER_02: Uh yeah, yeah.
• 45:59
  SPEAKER_02: You know, it's very interesting you remark upon that because if you look at the overall footprint of the big international brands, Marriott, Hilton, etc., their footprint in Scandinavia is actually pretty light on a on a total inventory basis.
• 46:16
  SPEAKER_02: Yeah.
• 46:17
  SPEAKER_02: Yeah.
• 46:17
  SPEAKER_00: So they are they are struggling with getting into the market, I think, and they're struggling with I think what I uh said in the beginning of this is that our lease agreements.
• 46:29
  SPEAKER_00: They're struggling to commit towards the landlord with the lease agreements.
• 46:36
  SPEAKER_00: Um I've been in in um debate with with some of the the the biggest players.
• 46:44
  SPEAKER_00: They don't understand how how we can get into the Scandinavian market, but I think they need to understand that this is our market.
• 46:51
  SPEAKER_00: This is how the real estate market works.
• 46:54
  SPEAKER_00: This is how uh the landlord wants it to be.
• 46:57
  SPEAKER_00: And if they want to get into Scandinavia, they need to adapt to it, and they need to accept that this is kind of the lease agreements you need to sign on the paper if you want to open up a Hilton Hotel or a Nakara Hotel.
• 47:12
  SPEAKER_02: Yeah.
• 47:13
  SPEAKER_02: Uh one of the other big trends you mentioned for luxury that has yet to really move down the chain scale is this whole idea of branded residences.
• 47:23
  SPEAKER_02: Do you ever see that working at the three-star level?
• 47:28
  SPEAKER_01: Yeah, I think so.
• 47:30
  SPEAKER_00: Um with high quality of those things that you do have, um but um but still with um help with technology, uh still with taking away some of the kind of luxury parts that I think the next generation will accept that are not there.
• 47:53
  SPEAKER_00: So if you focus on on on high, high quality on the luxury level, I think it's possible to to offer uh a similar product uh to a little bit lower price, but still on a high sky and high scale um uh part.
• 48:12
  SPEAKER_00: Yeah.
• 48:12
  SPEAKER_02: Yeah, no, that's uh that's probably uh that's probably the brilliantly said, it's the best way to say that because really going back to the core of City Box Hotels, which is what's valuable to the guest, and then let's uh let's take out all the other stuff that is not valuable.
• 48:29
  SPEAKER_00: So Yeah, I I think I think the next generation uh don't need the same uh type of service, for example.
• 48:36
  SPEAKER_00: They don't need um my grandmother, she needs someone to be there to take care of her.
• 48:43
  SPEAKER_00: But the the the uh 30s and 40s now, they are I think more than glad to help themselves as long as they have the tools for it, as long it's provided there, as long as it's easy accessible.
• 48:55
  SPEAKER_00: Uh and that I think is possible to do also on the luxury segment.
• 49:01
  SPEAKER_02: Yeah.
• 49:02
  SPEAKER_02: Wow.
• 49:02
  SPEAKER_02: Yeah, it's very uh it's it's very revealing to me to hear that because of course uh everyone expects to have these services, but uh young people, I'm I'm 40, and you know, if I wanted to plan uh any sort of trip, I would um use all the tools on the internet that are available to me.
• 49:21
  SPEAKER_02: And it's I don't need the concierge or even the bellhop.
• 49:25
  SPEAKER_02: I like to lift my own luggage because it's a little mini workout when I get there.
• 49:29
  SPEAKER_02: All those all those little things that uh that the previous generations expected are not necessarily of value to the next generation.
• 49:38
  SPEAKER_01: Yeah, I think so.
• 49:40
  SPEAKER_02: Yeah.
• 49:41
  SPEAKER_02: So um, you know, it's it's been a delightful conversation.
• 49:44
  SPEAKER_02: Uh is there any other important trends or any other anything else about City Box that uh the listeners should know about?
• 49:54
  SPEAKER_00: Um no, I I we we are a small player in the in the whole world.
• 50:00
  SPEAKER_00: Uh I think it's um room for those that are uh daring to do something different.
• 50:06
  SPEAKER_00: Um and and if you don't dare to do something different, then uh I think it's difficult to succeed as well.
• 50:14
  SPEAKER_00: Um so um I think that's uh some of what we are today.
• 50:20
  SPEAKER_00: Uh and I think that's something we're gonna be in the future as well.
• 50:24
  SPEAKER_00: I'm glad that we have um come so far with City Box.
• 50:28
  SPEAKER_00: Uh I think um budget travelers deserve uh a proper good budget hotel in the biggest cities in in Scandinavia, um, and and hopefully in more cities in in Europe, um uh because there are uh people on budget as well that are traveling.
• 50:48
  SPEAKER_00: And um I think that's something we're gonna see in the future as well.
• 50:52
  SPEAKER_02: Yeah, and uh Ivan, thank you so much for your perspective.
• 50:55
  SPEAKER_02: I love that.
• 50:56
  SPEAKER_02: Dare to be different, and of course, really looking at it from a leader in the uh in the affordable uh travel space.
• 51:04
  SPEAKER_02: Thank you for coming on the show.
• 51:06
  SPEAKER_01: Thank you for coming.
• 51:07
  SPEAKER_01: Thank you.
• 51:08
  SPEAKER_02: Yeah.